By Rajendra Jadhav; Editing by Jo Winterbottom and Ed Davies24 April 2013

JAMWADI, India (Reuters) – India may be heading for another bumper grain harvest, if the first forecast for this year's monsoon proves correct, but the rain may be too little - and too late - for southern and western states already parched by the worst drought in four decades.

Although last year's monsoon rains were, overall, just seven percent below normal, these states - including major sugar producer Maharashtra and cotton-growing Gujarat - went short, in some cases getting less than half the precipitation they needed.

A further drought this year could trigger mass migration to cities like Mumbai as families seek jobs and precious water. It would also hit crops, shrinking farm incomes and so reducing economic growth in the area, as well as fuelling food inflation.

India's struggling economy, Asia's third biggest, is at last showing some green shoots of recovery, but anything short of a drought-busting monsoon could put that at risk. A drought can wipe as much as 2 percentage points off economic growth, as farm output withers and consumption stalls.

"If the monsoon season is good, then farmers will earn money and start spending from October onwards. Till then we have to cope with the slowdown," said Kamalkant Deshmukh, a manager at Raghuvir Motors, which sells Hero motorcyles in Aurangabad in Maharashtra.

His sales halved in the first three months of 2013 from a year ago, while overall motorcycle sales dropped an annual 8.3 percent in March.

A widespread drought could push the overall economic growth rate in the current fiscal year ended March, 2014, down to as low as 5.1 percent from a current projection of 6 percent, said D.K. Joshi, chief economist at CRISIL Ltd. […]

Farmer Sanjay Wadekar from the village of Jamwadi in Maharashtra watched helplessly in recent weeks as wells on his land dried up and his 17-year-old sweet lime orchard died.

Now, he is planting cotton in the hope that the hardier, less thirsty crop will survive and bring some income.

"Due to the drought, I have lost my savings of the last few years. If the drought repeats again this year, I have no choice but to default on crop and tractor loans. I may have to sell some family gold for regular expenses," said Wadekar.

Maharashtra, Gujarat and Rajasthan in the west and the southern states of Karnataka, Tamil Nadu, Kerala and Andhra Pradesh are all in desperate need of ample rains this year, spanning an area roughly equivalent to Southern Europe.

According to some estimates, sugar output may drop below demand for the first time in four years in 2013/14 because the drought in Tamil Nadu, Maharashtra and Karnataka has reduced planting.

Sugar output has already been cut by 17 percent in Maharashtra, India's main producing state, and its grains production is down a similar amount.

Cotton output has also been hit, down over 29 percent in Gujarat, while Maharashtra's onion production - key for the spicy dishes - is likely to drop more than 19 percent.

In addition, states have bought sugar cane for fodder to ensure the survival of dairy cows, which become the main source of income for farmers when drought hits their crops.

The drought is so bad in Maharashtra that drinking supplies are running short. Nearly 12,000 villages have been affected and tanker trucks are out supplying water. People in Jamwadi have to trudge nearly 2 km to find wells which still hold water.

"Many of our relatives are moving to Mumbai, where they are getting work and tap water," said 25-year-old Salma Beniwale, on her third round trip to the well on a recent day. "We are also thinking to go there as I don't think we will get water in May." [more]

14 May 2013 (NDTV) – The drought in Maharashtra is, no doubt, serious this year. If the government is to be believed, it is the worst they are facing in last 40 years. Experts, however, opine that it is simply foolish to compare the drought of an under-developed state of 1972 to the Maharashtra of today - one of the country's highly developed state - ironically still craving for water.

(Times of India) – Gujarat Sachivalaya is abuzz with a strange speculation. The speculation is especially significant as it is taking rounds of the top state corridors of power at a time when Gujarat chief minister Narendra Modi has launched his month-long Krishi Mahotsav, an annual event to “teach” farmers what they should sow and how. While all agree in Sachivalaya that in the year 2012-13, Gujarat’s agricultural growth rate slipped in the negative, officials are unable to quantify the percentage.

Discussions have taken place on the matter, including at the highest level. While one bureaucrat said, in 2012-13, thanks to what he termed as “near-drought” situation, agricultural growth rate slipped to minus ( --) 3 per cent, another disagreed. “Soon you will hear from authoritative sources: Agriculture has slipped to around minus ( -- ) 13 per cent… In certain places in Gujarat, especially Saurashtra, you will be told, agricultural growth slipped to minus ( -- ) 22 per cent.”

There is reason to wonder. What has happened to all the tall claims made by Modi and his aides about double digit rate of growth in agriculture? So many check dams had come up and watershed projects launched, with such tall claims that even senior experts like Tushaar Shah and Ravindra Dholakia were “convinced” of little possibility of Gujarat’s growth rate slipping so badly. These structures would take care of any serious drought, has been their argument.

Investigations revealed some very interesting realities related with the working of the Gujarat government. An effort is underway in the corridors of power to demonstrate that Gujarat indeed “suffered” from a deep drought. The murmur is, unless you clearly showcase that there was a drought, there is little hope of triggering a loan waiver, which would involve a huge Government of India help.

One senior official, speaking on condition of anonymity, said, “Currently, preparations are underway to write off agricultural loans worth Rs 5,000 crore, including interest to the tune of Rs 300 crore. While the exact amount of the loan to be waived has not been decided, the argument is, loan waiver is being offered under the pretext of large-scale crop failure across the state. Insurance companies would be asked to pay for crop failure.”

The official further disclosed, “Most of the loan that would be waived was taken from the agricultural cooperative banks, controlled by powerful politicians. Some loan was taken even from the nationalized banks, too. Efforts were initiated a few months back by the state agriculture and cooperatives department to heap up facts to make a point that Gujarat indeed had a very bad drought, which ruined farmers, that they are in deep debt, and that they are in dire need of help.”

What this official said next was even more interesting. According to him, “Most of the loan -- around Rs 3,500 crore -- was disbursed in three months, between mid-July and mid-September 2012, when there was little reason for taking it. This was against the normal practice of most of the agricultural loan being disbursed by mid-June.” The official quoted babus in the know of things as saying that “the loans were disbursed in anticipation of drought, with the promise that it would be waived”!

In fact, the official divulged, there are already file notings in Sachivalaya which suggest that loans were disbursed for crops which were never sown. “In Saurashtra, certain cooperative banks issued loans for groundnut where Bt cotton was sown. This would, it was expected, help show that groundnut had been destroyed in order to claim loan waiver. A cooperative bank in Saurashtra which never issued loans for more Rs 30 lakh disbursed Rs 30 crore”, the official said, adding, “In another instance, area under cultivation was shown several times more than what it actually was.”

And where did all this money go? “We have no clue. But the suspicion is, it went to fund Gujarat state assembly elections, which took place in December 2012. While the BJP had the lion’s share, Congress cooperators were not far behind. One of them who issued such huge loans was a Congress strongman. Recently, he crossed over to the BJP and is fighting a by-poll from Porbandar”, the Mahatma’s birthplace, the official said. Everyone in Gujarat knows who this stongman is. [more]